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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2021

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                      

Commission File Number 001-36177

GlycoMimetics, Inc.

(Exact name of registrant as specified in its charter)

Delaware

06-1686563

(State or Other Jurisdiction of

Incorporation or Organization)

(I.R.S. Employer

Identification No.)

9708 Medical Center Drive

Rockville, Maryland

20850

(Address of principal executive offices)

(Zip Code)

(240243-1201

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading symbol(s)

Name of each exchange on which registered

Common Stock, $0.001 par value

GLYC

The Nasdaq Stock Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer            Accelerated Filer Smaller Reporting Company

Non-accelerated Filer        Emerging Growth Company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934).    Yes      No  

The number of outstanding shares of the registrant’s common stock, par value $0.001 per share, as of the close of business on August 3, 2021 was 51,539,010.

GLYCOMIMETICS, INC.

INDEX TO FORM 10-Q

PAGE

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

3

Balance Sheets as of June 30, 2021 (unaudited) and December 31, 2020

3

Unaudited Statements of Operations and Comprehensive Loss for the three and six months ended June 30, 2021 and 2020

4

Unaudited Statements of Stockholders’ Equity for the three and six months ended June 30, 2021 and 2020

5

Unaudited Statements of Cash Flows for the six months ended June 30, 2021 and 2020

6

Notes to Unaudited Financial Statements

7

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

19

Item 3. Quantitative and Qualitative Disclosures about Market Risk

28

Item 4. Controls and Procedures

28

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

29

Item 1A. Risk Factors

29

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

29

Item 6. Exhibits

29

Signatures

31

Table of Contents

Part I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

GLYCOMIMETICS, INC.

Balance Sheets

June 30, 

December 31, 

2021

2020

(Unaudited)

Assets

    

    

Current assets:

Cash and cash equivalents

$

118,854,094

$

137,035,017

Prepaid expenses and other current assets

 

1,460,867

 

1,238,328

Total current assets

 

120,314,961

 

138,273,345

Property and equipment, net

 

491,088

 

620,673

Prepaid research and development expenses

 

1,560,607

 

1,560,607

Deposits

52,320

52,320

Operating lease right-of-use asset

1,959,703

2,325,224

Total assets

$

124,378,679

$

142,832,169

Liabilities & stockholders’ equity

Current liabilities:

Accounts payable

$

1,174,589

$

2,089,939

Accrued expenses

 

8,125,541

 

9,439,881

Lease liabilities

 

948,787

 

898,549

Total current liabilities

 

10,248,917

 

12,428,369

Noncurrent accrued expenses

408,323

264,329

Lease liabilities, net of current portion

1,435,019

1,920,015

Total liabilities

 

12,092,259

 

14,612,713

Stockholders’ equity:

Preferred stock; $0.001 par value; 5,000,000 shares authorized, no shares issued and outstanding at June 30, 2021 and December 31, 2020

 

 

Common stock; $0.001 par value; 100,000,000 shares authorized; 51,539,010 shares issued and outstanding at June 30, 2021; 49,017,622 shares issued and outstanding at December 31, 2020

 

51,539

 

49,018

Additional paid-in capital

 

450,377,754

 

437,639,991

Accumulated deficit

 

(338,142,873)

 

(309,469,553)

Total stockholders’ equity

 

112,286,420

 

128,219,456

Total liabilities and stockholders’ equity

$

124,378,679

$

142,832,169

The accompanying notes are an integral part of the unaudited financial statements.

3

Table of Contents

 

GLYCOMIMETICS, INC.

Unaudited Statements of Operations and Comprehensive Loss

Three Months Ended June 30, 

Six Months Ended June 30, 

2021

2020

2021

2020

Revenue

    

$

142

    

$

    

$

1,055,582

    

$

9,000,000

Costs and expenses:

Research and development expense

 

10,167,282

 

9,870,813

 

21,314,517

 

22,539,073

General and administrative expense

 

4,237,342

 

4,234,917

 

8,425,452

 

8,674,677

Total costs and expenses

 

14,404,624

 

14,105,730

 

29,739,969

 

31,213,750

Loss from operations

 

(14,404,482)

 

(14,105,730)

 

(28,684,387)

 

(22,213,750)

Interest income

 

5,221

 

26,701

 

11,067

 

472,117

Net loss and comprehensive loss

$

(14,399,261)

$

(14,079,029)

$

(28,673,320)

$

(21,741,633)

Basic and diluted net loss per common share

$

(0.28)

$

(0.32)

$

(0.56)

$

(0.50)

Basic and diluted weighted-average number of common shares

 

51,539,010

 

43,801,251

 

51,118,096

 

43,688,420

The accompanying notes are an integral part of the unaudited financial statements.

4

Table of Contents

GLYCOMIMETICS, INC.

Unaudited Statements of Stockholders’ Equity

Additional

Total

Common Stock

Paid-In

Accumulated

Stockholders’

   

Shares  

   

Amount  

   

Capital

   

Deficit

   

Equity

Balance at December 31, 2020

 

49,017,622

$

49,018

$

437,639,991

$

(309,469,553)

$

128,219,456

Issuance of common stock, net of issuance costs

2,517,603

2,517

9,557,182

9,559,699

Exercise of options

 

3,785

4

4,235

4,239

Stock-based compensation

 

1,614,185

1,614,185

Net loss

 

(14,274,059)

(14,274,059)

Balance at March 31, 2021

 

51,539,010

51,539

448,815,593

(323,743,612)

 

125,123,520

Stock-based compensation

 

 

 

1,562,161

 

 

1,562,161

Net loss

 

 

 

 

(14,399,261)

 

(14,399,261)

Balance at June 30, 2021

 

51,539,010

$

51,539

$

450,377,754

$

(338,142,873)

$

112,286,420

Additional

Total

Common Stock

Paid-In

Accumulated

Stockholders’

   

Shares  

   

Amount  

   

Capital

   

Deficit

   

Equity

Balance at December 31, 2019

 

43,466,933

$

43,465

$

412,599,772

$

(258,442,650)

$

154,200,587

Exercise of options

 

116,046

116

129,856

129,972

Stock-based compensation

 

1,822,148

1,822,148

Net loss

 

(7,662,604)

(7,662,604)

Balance at March 31, 2020

 

43,582,979

43,581

414,551,776

(266,105,254)

 

148,490,103

Issuance of common stock, net of issuance costs

3,126,709

3,127

9,571,010

 

9,574,137

Exercise of options

 

5,010

 

5

 

5,606

 

 

5,611

Stock-based compensation

 

 

 

1,761,674

 

 

1,761,674

Net loss

 

 

 

 

(14,079,029)

 

(14,079,029)

Balance at June 30, 2020

 

46,714,698

$

46,713

$

425,890,066

$

(280,184,283)

$

145,752,496

The accompanying notes are an integral part of the unaudited financial statements.

5

Table of Contents

GLYCOMIMETICS, INC.

Unaudited Statements of Cash Flows

Six Months Ended June 30, 

    

2021

    

2020

Operating activities

Net loss

$

(28,673,320)

$

(21,741,633)

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation

 

135,573

 

135,872

Loss on disposal of assets

2,174

Non-cash lease expense

365,521

332,413

Stock-based compensation

 

3,176,346

 

3,583,822

Changes in assets and liabilities:

Prepaid expenses and other current assets

 

(222,539)

 

812,917

Accounts payable

 

(915,351)

 

(70,944)

Accrued expenses

 

(1,314,340)

 

(1,230,997)

Noncurrent accrued expenses

143,994

515,144

Lease liabilities

(434,757)

(388,646)

Net cash used in operating activities

 

(27,736,699)

 

(18,052,052)

Investing activities

Purchases of property and equipment

 

(8,162)

 

(14,519)

Net cash used in investing activities

 

(8,162)

 

(14,519)

Financing activities

Proceeds from issuance of common stock, net of issuance costs

 

9,559,699

 

9,574,137

Proceeds from exercise of stock options

 

4,239

 

135,583

Net cash provided by financing activities

 

9,563,938

 

9,709,720

Net change in cash and cash equivalents

 

(18,180,923)

 

(8,356,851)

Cash and cash equivalents, beginning of period

 

137,035,017

 

158,201,441

Cash and cash equivalents, end of period

$

118,854,094

$

149,844,590

Non-cash investing and financing activities

Property acquisition costs included in accounts payable

$

$

6,592

The accompanying notes are an integral part of the unaudited financial statements.

6

Table of Contents

GLYCOMIMETICS, INC.

Notes to Unaudited Financial Statements

1. Description of the Business

GlycoMimetics, Inc. (the Company), a Delaware corporation headquartered in Rockville, Maryland, was incorporated in April 2003. The Company is a clinical-stage biotechnology company focused on the discovery and development of novel glycomimetic drugs to address unmet medical needs resulting from diseases in which carbohydrate biology plays a key role. Glycomimetics are molecules that mimic the structure of carbohydrates involved in important biological processes. Using its expertise in carbohydrate chemistry and knowledge of carbohydrate biology, the Company is developing a pipeline of proprietary glycomimetics that inhibit disease-related functions of carbohydrates, such as the roles they play in inflammation, cancer and infection.

The Company’s executive personnel have devoted substantially all of their time to date to the planning and organization of the Company, the process of hiring scientists and other personnel, initiating and overseeing research and development programs, including planned and ongoing clinical trials, and securing adequate capital for anticipated growth and operations. The Company has not commercialized any of its drug candidates or commenced commercial operations. The Company is subject to a number of risks similar to those of other companies in similar development stages, including dependence on key individuals, the need to develop commercially viable drugs, the need to successfully compete with other companies, many of whom are larger and better capitalized, and the need to obtain adequate additional financing to fund the development of its drug candidates. The Company has incurred significant operating losses since inception and has relied on its ability to fund its operations through private and public equity financings, and management expects operating losses and negative operating cash flows to continue for the foreseeable future. As the Company continues to incur losses, profitability will be dependent upon the successful development, approval and commercialization of its drug candidates and achieving a level of revenues adequate to support the Company’s cost structure. The Company may never achieve profitability, and unless and until it does, the Company will continue to need to raise additional capital. The Company believes that its currently available funds will be sufficient to fund the Company’s operations through at least 12 months from the date of the filing of this Quarterly Report. Management intends to fund future operations through additional public or private equity or debt offerings and may seek additional capital through arrangements with strategic partners or from other sources.

2. Significant Accounting Policies

Basis of Accounting

The accompanying financial statements were prepared based on the accrual method of accounting in accordance with U.S. generally accepted accounting principles (GAAP).

Unaudited Financial Statements

The accompanying balance sheet as of June 30, 2021, statements of operations and comprehensive loss and stockholders’ equity for the three and six months ended June 30, 2021 and 2020 and statements of cash flows for the six months ended June 30, 2021 and 2020 are unaudited. These unaudited financial statements have been prepared in accordance with the rules and regulations of the United States Securities and Exchange Commission (the SEC) for interim financial information. Accordingly, they do not include all of the information and footnotes required by GAAP for complete annual financial statements. These financial statements should be read in conjunction with the audited financial statements and the accompanying notes for the year ended December 31, 2020 contained in the Company’s Annual Report on Form 10-K filed with the SEC on March 2, 2021. The unaudited interim financial statements have been prepared on the same basis as the annual financial statements and in the opinion of management reflect all adjustments (consisting of normal recurring adjustments) necessary to state fairly the Company’s financial position as of June 30, 2021 and its results of operations and changes in its stockholders’ equity for the three and six months ended June 30, 2021 and 2020 and its cash flows for the six months ended June 30, 2021 and 2020. The December 31, 2020 balance sheet included herein was derived from audited financial statements, but does not include all disclosures including notes required by GAAP for complete annual financial statements. The financial data and other information

7

Table of Contents

disclosed in these notes to the financial statements related to the three and six months ended June 30, 2021 and 2020 are unaudited. Interim results are not necessarily indicative of results for an entire year or for any future period.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Although actual results could differ from those estimates, management does not believe that such differences would be material.

Fair Value Measurements

The Company had no assets or liabilities that were measured using quoted prices for similar assets and liabilities or significant unobservable inputs (Level 2 and Level 3 assets and liabilities, respectively) as of June 30, 2021 and December 31, 2020. The carrying value of cash held in money market funds of $116.9 million and $135.0 million as of June 30, 2021 and December 31, 2020, respectively, is included in cash and cash equivalents and approximates market values based on quoted market prices (Level 1 inputs).

Concentration of Credit Risk

Credit risk represents the risk that the Company would incur a loss if counterparties failed to perform pursuant to the terms of their agreements. Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash and cash equivalents. Cash and cash equivalents consist of money market funds with major financial institutions in the United States. These funds may be redeemed upon demand and, therefore, bear minimal risk. The Company does not anticipate any losses on such balances.

Revenue Recognition

The Company applies Accounting Standards Codification, or ASC, Topic 606, Revenue from Contracts with Customers (Topic 606), to all contracts with customers, except for contracts that are within the scope of other standards, such as leases, insurance, collaboration arrangements and financial instruments. Under Topic 606, an entity recognizes revenue when its customer obtains control of promised goods or services in an amount that reflects the consideration which the entity expects to receive in exchange for those goods and services. To determine revenue recognition for arrangements that an entity determines are within the scope of Topic 606, the entity performs the following five steps: (i) identify the contract(s) with the customer(s); (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods and services it transfers to the customer. At contract inception, the Company assesses the goods or services promised within each contract that falls under the scope of Topic 606, determines those that are performance obligations and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.

The Company enters into licensing agreements which are within the scope of Topic 606, under which it licenses certain of its drug candidates’ rights to third parties. The terms of these arrangements typically include payment of one or more of the following: non-refundable, up-front license fees; development, regulatory and commercial milestone payments; and royalties on net sales of the licensed product, if and when earned. See Note 9 for additional information regarding the Company’s license agreement.

In determining the appropriate amount of revenue to be recognized as it fulfills its obligation under each of its agreements, the Company performs the five steps under Topic 606 described above. As part of the accounting for these arrangements, the Company must develop assumptions that require judgment to determine the stand-alone selling price, which may include forecasted revenues, development timelines, reimbursement of personnel costs, discount rates and probabilities of technical and regulatory success.

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Licensing of Intellectual Property: If the license to the Company’s intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, the Company recognizes revenue from non-refundable, up-front fees allocated to the license when the license is transferred to the licensee and the licensee is able to use and benefit from the license. For licenses that are bundled with other promises, the Company utilizes judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue from non-refundable, up-front fees. The Company evaluates the measure of progress each reporting period, and, if necessary, adjusts the measure of performance and related revenue recognition.

Milestone Payments: At the inception of each arrangement that includes development milestone payments, the Company evaluates whether the milestones are considered probable of being reached and estimates the amount to be included in the transaction price using the most likely amount method. If it is probable that a significant revenue reversal will not occur, the associated milestone value is included in the transaction price. Milestone payments that are not within the control of the Company or the licensee, such as regulatory approvals, are not considered probable of being achieved until those approvals are received. The transaction price is then allocated to each performance obligation on a relative stand-alone selling price basis, for which the Company recognizes revenue as or when the performance obligations under the contract are satisfied. At the end of each subsequent reporting period, the Company re-evaluates the probability of achievement of such development milestones and any related constraint and, if necessary, adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect license, collaboration and other revenues and earnings in their period of adjustment.

Royalties: For arrangements that include sales-based royalties, including milestone payments based on the level of sales, and for which the license is deemed to be the predominant item to which royalties relate, the Company recognizes revenue at the later of (i) when the related sales occur or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied). To date, the Company has not recognized any royalty revenue from its license agreements.

Manufacturing and Supply: The promises under the Company’s agreements may include clinical and/or commercial manufacturing products to be provided by the Company to the counterparty. The services are generally determined to be distinct from the other promises or performance obligations identified in the arrangement. The Company recognizes the transaction price allocated to these services as revenue at a point in time when transfer of control of the related products to the customer occurs.

Accruals for Clinical Trial Expenses

Clinical trial costs primarily consist of expenses incurred under agreements with contract research organizations (CROs), investigative sites, laboratory testing expenses, data management and consultants that conduct the Company's clinical trials. Clinical trial expenses are a significant component of research and development expenses, and the Company outsources a significant portion of these clinical trial activities to third parties. The accrual for site and patient costs includes inputs such as estimates of patient enrollment, patient cycles incurred, clinical site activations, estimated project duration and other pass-through costs. These inputs are required to be estimated due to a lag in receiving the actual clinical information from third parties. Payments for these activities are based on the terms of the individual arrangements, which may differ from the pattern of costs incurred, and are reflected on the balance sheets as a prepaid asset or accrued expenses. These third-party agreements are generally cancellable, and related costs are recorded as research and development expenses as incurred. Except for payments made in advance of services, clinical trial costs are expensed as incurred. Non-refundable advance clinical payments for goods or services that will be used or rendered for future research and development activities are recorded as a prepaid asset and recognized as expense as the related goods are delivered or the related services are performed. When evaluating the adequacy of the accrued expenses, management assessments include: (i) an evaluation by the project manager of the work that has been completed during the period; (ii) measurement of progress prepared internally and/or provided by the third-party service provider; (iii) analyses of data that justify the progress; and (iv) the Company’s judgment. Significant judgments and estimates may be made in determining the accrued balances at the end of any reporting period. Actual results could differ from the estimates made. The Company’s historical clinical accrual estimates have not been materially different from the actual costs. Clinical trial accruals that are due longer than one year are classified as noncurrent accrued expenses.

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Stock-Based Compensation

Stock-based payments are accounted for in accordance with the provisions of ASC 718, Compensation—Stock Compensation. The fair value of stock-based payments is estimated, on the date of grant, using the Black-Scholes-Merton model. The resulting fair value is recognized ratably over the requisite service period, which is generally the vesting period of the option. The Company accounts for forfeitures as they occur and does not make an estimate of expected forfeitures at the time of grant.

The Company has elected to use the Black-Scholes-Merton option pricing model to value any options granted. The Company will reconsider use of the Black-Scholes-Merton model if additional information becomes available in the future that indicates another model would be more appropriate or if grants issued in future periods have characteristics that prevent their value from being reasonably estimated using this model.

A discussion of management’s methodology for developing some of the assumptions used in the valuation model follows:

Expected Dividend Yield—The Company has never declared or paid dividends and has no plans to do so in the foreseeable future.

Expected Volatility—Volatility is a measure of the amount by which a financial variable such as share price has fluctuated (historical volatility) or is expected to fluctuate (expected volatility) during a period. The Company bases the expected volatility on the historical volatility of the Company’s publicly traded common stock.

Risk-Free Interest Rate—This is the U.S. Treasury rate for the week of each option grant during the year, having a term that most closely resembles the expected life of the option.

Expected Term—This is a period of time that the options granted are expected to remain unexercised. Options granted have a maximum term of 10 years. The Company estimates the expected life of the option term to be 6.25 years. The Company uses a simplified method to calculate the average expected term.

Net Loss Per Common Share

Basic net loss per common share is determined by dividing net loss by the weighted-average number of common shares outstanding during the period, without consideration of common stock equivalents. Diluted net loss per share is computed by dividing net loss by the weighted-average number of common stock equivalents outstanding for the period. The treasury stock method is used to determine the dilutive effect of the Company’s stock options and restricted stock units.

The following potentially dilutive securities outstanding have been excluded from the computation of diluted weighted-average common shares outstanding, as they would be anti-dilutive:

Six Months Ended June 30, 

    

2021

    

2020

Stock options and restricted stock units

 

6,596,390

 

6,429,701

Comprehensive Loss

Comprehensive loss comprises net loss and other changes in equity that are excluded from net loss. For the three and six months ended June 30, 2021 and 2020, the Company’s net loss equaled comprehensive net loss and, accordingly, no additional disclosure is presented.

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Recently Issued Accounting Standards

Adopted Accounting Standards

In December 2019, the FASB issued ASU 2019-12. ASU 2019-12 removes certain exceptions for recognizing deferred taxes for investments, performing intra-period allocation and calculating income taxes in interim periods. The ASU also adds guidance to reduce complexity in certain areas, including deferred taxes for goodwill and allocating taxes for members of a consolidated group. ASU 2019-12 was effective for all entities for fiscal years beginning after December 15, 2020. As of January 1, 2021, the Company adopted the standard, which did not have a material impact on the Company's financial statements.

Accounting Standards Not Yet Adopted

With the exception of the new standard discussed above, there have been no new accounting pronouncements that have significance, or potential significance, to the Company’s financial statements.

3. Prepaid Expenses and Other Current Assets

The following is a summary of the Company’s prepaid expenses and other current assets:

June 30, 

December 31, 

    

2021

    

2020

Prepaid research and development expenses

$

938,913

$

965,504

Other prepaid expenses

520,298

270,675

Other receivables

 

1,656

 

2,149

Prepaid expenses and other current assets

$

1,460,867

$

1,238,328

4. Property and Equipment

Property and equipment, net consists of the following:

June 30, 

December 31, 

    

2021

    

2020

Furniture and fixtures

$

345,712

$

345,712

Laboratory equipment

 

1,406,346

 

1,446,596

Office equipment

 

16,755

 

16,755

Computer equipment

 

300,010

 

327,776

Leasehold improvements

616,133

616,133

Property and equipment

 

2,684,956

 

2,752,972

Less accumulated depreciation

 

(2,193,868)

 

(2,132,299)

Property and equipment, net

$

491,088

$

620,673

Depreciation expense was $67,485 and $67,681 for the three months ended June 30, 2021 and 2020, respectively, and $135,573 and $135,872 for the six months ended June 30, 2021 and 2020, respectively.

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5. Accrued Expenses

The following is a summary of the Company’s accrued expenses:

    

June 30, 

December 31, 

2021

2020

Accrued research and development expenses

$

4,769,711

$

5,114,420

Accrued bonuses

2,002,407

3,341,184

Accrued consulting and other professional fees

 

380,181

 

194,760

Accrued employee benefits

 

785,276

 

569,048

Other accrued expenses

 

187,966

 

220,469

Accrued expenses

$

8,125,541

$

9,439,881

6. Leases

At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the circumstances present. The Company determines a lease exists if the contract conveys the right to control an identified asset for a period of time in exchange for consideration. Control is considered to exist when the lessee has the right to obtain substantially all of the economic benefits from the use of an identified asset as well as direct the right to use of that asset. Leases with a term greater than one year are recognized on the balance sheet as right-of-use assets, lease liabilities and, if applicable, long-term lease liabilities. The Company has elected not to recognize on the balance sheet leases with terms of one year or less on the lease commencement date. If a contract is considered to be a lease, the Company recognizes a lease liability based on the present value of the future lease payments over the expected lease term, with an offsetting entry to recognize a right-of-use asset.

The interest rate implicit in lease contracts is typically not readily determinable. As such, the Company utilizes the appropriate incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a term similar to the term of the lease for which the rate is estimated. Certain adjustments to the right-of-use asset may be required for items such as initial direct costs paid or incentives received.

The Company leases office and research space in Rockville, Maryland under an operating lease with a term from June 15, 2015 through October 31, 2023 (the Lease) that is subject to annual rent increases. The Company has the right to sublease or assign all or a portion of the premises, subject to the conditions set forth in the Lease. The Lease may be terminated early by either the landlord or the Company in certain circumstances. In connection with the Lease, the Company received rent abatement as a lease incentive in the initial year of the Lease.

In March 2016, the Company amended the Lease (the Lease Amendment) to lease additional space as of June 1, 2016. In May 2016, the Company also paid a security deposit of $52,320 to be held until the expiration or termination of the Company’s obligations under the Lease. The term of the Lease Amendment for the additional space continues through October 31, 2023, the same date as for the premises originally leased under the Lease, subject to the Company’s renewal option set forth in the Lease.

The Company identified and applied the following significant assumptions in recognizing the right-of-use asset and corresponding liability for the Lease and Lease Amendment:

Lease term – The lease term includes both the noncancelable period and, when applicable, cancelable option periods where failure to exercise such option would result in an economic penalty. The Company’s renewal option to extend was not reasonably certain of being exercised as of June 30, 2021.

Incremental borrowing rate – As the Company’s lease does not provide an implicit rate, the Company used an incremental borrowing rate, or IBR, which is the rate incurred to borrow on a collateralized basis over a term similar to the term of the lease for which the rate is estimated. The Company determined the IBR to be 8.0% based on an estimated rate that considered the Company’s credit risk in the United States for a collateralized borrowing and term similar to the Lease.

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As of June 30, 2021, the weighted-average remaining lease term was 2.3 years. There were no additional operating leases entered into during the six months ended June 30, 2021.

The components of lease expense and related cash flows were as follows:

Three Months Ended June 30, 

Six Months Ended June 30, 

   

2021

   

2020

   

2021

   

2020

Operating lease cost

$

231,989

$

231,989

$

463,979

$

463,979

Variable lease cost

51,608

144,009

198,029

305,955

Total operating lease cost

$

283,597

$

375,998

$

662,008

$

769,934

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash outflows for operating leases

$

267,001

$

260,489

$

533,216

$

520,211

Maturities of lease liability due under these lease agreements as of June 30, 2021 were as follows:

Operating Lease

    

Obligation

July 1, 2021 - December 31, 2021

$

544,253

2022

1,104,356

2023

940,840

2024

2025

Thereafter

Total

2,589,449

Present value adjustment

(205,643)

Present value of lease payments

$

2,383,806

7. Stockholders’ Equity

At-The-Market Sales Facility

On September 28, 2017, the Company entered into an at-the-market sales agreement (the 2017 Sales Agreement) with Cowen and Company, LLC (Cowen) to sell up to $100.0 million of the Company’s common stock registered under a shelf registration statement filed with the U.S. Securities and Exchange Commission in September 2017. During the six months ended June 30, 2020, the Company issued and sold 3,126,709 shares of common stock under the 2017 Sales Agreement. The shares were sold at a weighted average per share of $3.16, for aggregate net proceeds of $9.6 million, after deducting commissions and offering expenses. The shelf registration statement under which the shares that could be sold under the 2017 Sales Agreement were registered expired on October 6, 2020.

On October 7, 2020, the Company filed a prospectus supplement to a shelf registration statement that it filed in May 2019 and entered into a new at-the-market sales agreement (the 2020 Sales Agreement) with Cowen. Under the 2020 Sales Agreement, the Company may sell up to $100.0 million of the Company’s common stock registered under the shelf registration statement that was filed in May 2019. The 2020 Sales Agreement replaces the 2017 Sales Agreement between the Company and Cowen, and the $100.0 million that may be sold under the 2020 Sales Agreement excludes any amounts that were sold under the 2017 Sales Agreement. During the six months ended June 30, 2021, the Company issued and sold 2,517,603 shares of common stock under the 2020 Sales Agreement at a weighted average price per share of $3.92, for aggregate net proceeds of $9.6 million, after deducting commissions and offering expenses. As of June 30, 2021, approximately $86.3 million remained available to be sold under the terms of the 2020 Sales Agreement. Subsequent to June 30, 2021, there have been no additional sales under the 2020 Sales Agreement.

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2003 Stock Incentive Plan

The 2003 Stock Incentive Plan (the 2003 Plan) provided for the grant of incentives and nonqualified stock options and restricted stock awards. The exercise price for incentive stock options must be at least equal to the fair value of the common stock on the grant date. Unless otherwise stated in a stock option agreement, 25% of the shares subject to an option grant will vest upon the first anniversary of the vesting start date and thereafter at the rate of one forty-eighth of the option shares per month as of the first day of each month after the first anniversary. Upon termination of employment by reasons other than death, cause, or disability, any vested options shall terminate 60 days after the termination date. Stock options terminate 10 years from the date of grant. The 2003 Plan expired on May 21, 2013.

A summary of the Company’s stock option activity under the 2003 Plan for the six months ended June 30, 2021 is as follows:

 

WEIGHTED-

AGGREGATE

 

WEIGHTED-

AVERAGE

INTRINSIC

 

AVERAGE

REMAINING

VALUE

 

OUTSTANDING

EXERCISE

CONTRACTUAL

(IN

OPTIONS

    

PRICE

    

TERM (YEARS) 

    

THOUSANDS)

Outstanding as of December 31, 2020

97,250

$

1.96

 

1.3

Options exercised

(3,785)

 

1.12

Options forfeited

 

Outstanding, Vested and Exercisable as of June 30, 2021

93,465

 

2.00

 

0.8

$

31

As of June 30, 2021, outstanding options under the 2003 Plan were fully expensed and all shares underlying outstanding options were fully vested. Total intrinsic value of the options exercised during the six months ended June 30, 2021 and 2020 was $8,668 and $468,458, respectively, and total cash received for options exercised was $4,239 and $135,583 during the six months ended June 30, 2021 and 2020, respectively.

2013 Equity Incentive Plan

The Company’s board of directors adopted, and its stockholders approved, its 2013 Equity Incentive Plan (the 2013 Plan) effective on January 9, 2014. The 2013 Plan provides for the grant of incentive stock options within the meaning of Section 422 of the Internal Revenue Code to the Company’s employees and its parent and subsidiary corporations’ employees, and for the grant of nonstatutory stock options, restricted stock awards, restricted stock unit awards, stock appreciation rights, performance stock awards and other forms of stock compensation to its employees, including officers, consultants and directors. The 2013 Plan also provides for the grant of performance cash awards to the Company’s employees, consultants and directors. Unless otherwise stated in a stock option agreement, 25% of the shares subject to an option grant will typically vest upon the first anniversary of the vesting start date, with the balance of the shares vesting in a series of thirty-six successive equal monthly installments as of the first day of each month measured from the first anniversary of the vesting start date. Upon termination of employment by reasons other than death, cause, or disability, any vested options will terminate 90 days after the termination date, unless otherwise set forth in a stock option agreement. Stock options generally terminate 10 years from the date of grant.

Authorized Shares

The maximum number of shares of common stock that initially could be issued under the 2013 Plan was 1,000,000 shares, plus any shares subject to stock options or similar awards granted under the 2003 Plan that expire or terminate without having been exercised in full or are forfeited or repurchased by the Company. The number of shares of common stock reserved for issuance under the 2013 Plan automatically increases on January 1 of each year until January 1, 2023, by 3% of the total number of shares of common stock outstanding on December 31 of the preceding calendar year, or a lesser number of shares as may be determined by the Company’s board of directors. The maximum number of shares that may be issued pursuant to exercise of incentive stock options under the 2013 Plan is 20,000,000 shares.

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Shares issued under the 2013 Plan may be authorized but unissued or reacquired shares of common stock. Shares subject to stock awards granted under the 2013 Plan that expire or terminate without being exercised in full, or that are paid out in cash rather than in shares, will not reduce the number of shares available for issuance under the 2013 Plan. Additionally, shares issued pursuant to stock awards under the 2013 Plan that the Company repurchases or that are forfeited, as well as shares reacquired by the Company as consideration for the exercise or purchase price of a stock award or to satisfy tax withholding obligations related to a stock award, will become available for future grant under the 2013 Plan.

A summary of the Company’s stock option activity under the 2013 Plan for the six months ended June 30, 2021 is as follows:

WEIGHTED-

AGGREGATE

 

WEIGHTED-

AVERAGE

INTRINSIC

 

AVERAGE

REMAINING

VALUE

 

OUTSTANDING

EXERCISE

CONTRACTUAL

(IN

 

OPTIONS

    

PRICE

    

TERM (YEARS) 

    

THOUSANDS)

Outstanding as of December 31, 2020

5,753,211

$

8.93

6.6

Options granted

898,100

3.70

Options exercised

Options forfeited

(815,132)

8.32

Outstanding as of June 30, 2021

5,836,179

8.22

6.8

$

Vested or expected to vest as of June 30, 2021

5,836,179

8.22

6.8

Exercisable as of June 30, 2021

4,128,319

9.17

5.2

As of June 30, 2021, there was $8,015,737 of total unrecognized compensation expense related to unvested options under the 2013 Plan that will be recognized over a weighted-average period of approximately 2.1 years. There were no options exercised under the 2013 Plan during the six months ended June 30, 2021 and 2020. The total fair value of shares underlying options which vested in the six months ended June 30, 2021 and 2020 was $3,745,954 and $5,014,602, respectively.

A restricted stock unit (RSU) is a stock award that entitles the holder to receive shares of the Company’s common stock as the award vests. The fair value of each RSU is based on the closing price of the Company’s common stock on the date of grant. During the six months ended June 30, 2021, the Company awarded RSUs under the 2013 Plan to all of its employees. The RSUs granted vest over four years in equal installments on each anniversary of the grant date. Compensation expense is recognized on a straight-line basis. As of June 30, 2021, there was $1,456,954 of total unrecognized compensation expense associated with outstanding RSU grants that will be recognized over a weighted-average period of approximately 1.9 years.

The following is a summary of RSU activity under the 2013 Plan for the six months ended June 30, 2021:

 

Weighted-Average

 

Number of Shares

Grant Date

 

Underlying RSUs

    

Fair Value

 

Unvested at December 31, 2020

192,533

$

4.53

Granted

444,613

 

3.72

Forfeited

(46,492)

 

3.83

Vested

 

Unvested at June 30, 2021

590,654

 

3.98

Inducement Plan

In January 2020, the Company’s board of directors adopted the GlycoMimetics, Inc. Inducement Plan (the Inducement Plan). The Inducement Plan provides for the grant of nonstatutory stock options, restricted stock awards, restricted stock unit awards, stock appreciation rights and other forms of stock awards to individuals not previously an employee or director of the Company as an inducement for such individuals to join the Company. Unless otherwise stated in an applicable stock option agreement, one-fourth of the shares subject to an option grant under the Inducement

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Plan will typically vest upon the first anniversary of the vesting start date, with the balance of the shares vesting in a series of thirty-six successive equal monthly installments as of the first day of each month measured from the first anniversary of the vesting start date, subject to the new employee’s continued service with the Company through the applicable vesting dates. Upon termination of employment by reasons other than death, cause or disability, any vested options will terminate 90 days after the termination date, unless otherwise set forth in a stock option agreement. Stock options generally terminate 10 years from the date of grant. There were 500,000 shares of common stock reserved under the Inducement Plan at its adoption date. In August 2021, the Company’s board of directors adopted an amendment to the Inducement Plan to increase the number of shares reserved to 2,000,000 shares.

A summary of the Company’s stock option activity under the Inducement Plan for the six months ended June 30, 2021 is as follows:

WEIGHTED-

AGGREGATE

 

WEIGHTED-

AVERAGE

INTRINSIC

 

AVERAGE

REMAINING

VALUE

 

OUTSTANDING

EXERCISE

CONTRACTUAL

(IN

 

OPTIONS

    

PRICE

    

TERM (YEARS) 

    

THOUSANDS)

Outstanding as of December 31, 2020

100,600

$

3.09

9.5

Options granted

Options exercised

Options forfeited

(24,508)

2.06

Outstanding as of June 30, 2021

76,092

3.42

8.1

$

4

Vested or expected to vest as of June 30, 2021

76,092

3.42

8.1

4

Exercisable as of June 30, 2021

11,967

2.06

1.6

3

As of June 30, 2021, there was $132,210 of total unrecognized compensation expense related to unvested options under the Inducement Plan that will be recognized over a weighted-average period of approximately 3.1 years. The total fair value of shares underlying options which vested in the six months ended June 30, 2021 was $17,591. There were no options that vested during the six months ended June 30, 2020. There were no options exercised under the Inducement Plan during the six months ended June 30, 2021 and 2020.

The weighted-average fair value of the options granted under the 2013 Plan and Inducement Plan during the six months ended June 30, 2021 and 2020 was $2.63 per share and $3.19 per share, respectively, applying the Black-Scholes-Merton option pricing model utilizing the following weighted-average assumptions:

Six Months Ended June 30, 

    

2021

2020

Expected term

 

6.25 years

6.25 years

Expected volatility

 

83.75%

84.39%

Risk-free interest rate

 

0.67%

1.45%

Expected dividend yield

 

0%

0%

Stock-based compensation expense was classified on the statements of operations as follows for the three and six months ended June 30, 2021 and 2020:

Three Months Ended June 30, 

Six Months Ended June 30, 

    

2021

2020

   

2021

2020

Research and development expense

$

609,321

$

747,006

$

1,298,294

$

1,483,037

General and administrative expense

 

952,840

 

1,014,667

 

1,878,052

 

2,100,785

Total stock-based compensation expense

$

1,562,161

$

1,761,673

$

3,176,346

$

3,583,822

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8. Income Taxes

The Company has not recorded any tax provision or benefit for the six months ended June 30, 2021 and 2020. The Company has provided a valuation allowance for the full amount of its net deferred tax assets since realization of any future benefit from deductible temporary differences, net operating loss carryforwards and research and development credits is not more-likely-than-not to be realized at June 30, 2021 and December 31, 2020.

9. License and Collaboration Agreements

Apollomics

In January 2020, the Company entered into a collaboration and license agreement (the Agreement) with Apollomics (Hong Kong), Limited (Apollomics) for the development, manufacture and commercialization of products derived from two of the Company’s compounds, GMI-1271 and GMI-1687 (the Products) for therapeutic and prophylactic uses (the Field) in China, Taiwan, Hong Kong and Macau (the Territory). Under the terms of the Agreement, the Company granted Apollomics:

an exclusive license, with the right to sublicense, to develop, manufacture and have manufactured, distribute, market, promote, sell, have sold, offer for sale, import, label, package and otherwise the Products in the Field in the Territory; and
a non-exclusive license to conduct preclinical research with respect to Products in the Field outside of the Territory for the purposes of developing such Products for use in the Territory.

The Company evaluated the Agreement under the provisions of ASC 606 and identified two performance obligations under this revenue arrangement: the (i) delivery of functional licenses and (ii) manufacture and supply of the Products. The initial transaction price consists of a $9.0 million non-refundable up-front payment which was allocated to the delivered functional licenses and recognized in full as revenue in the first quarter of 2020 given that the performance obligation was satisfied upon inception. The Agreement contains various forms of variable consideration, including (i) up to $75.0 million in development milestones based on achievement of certain clinical and regulatory events, (ii) up to $105.0 million of sales-based commercial milestones based on achievement of certain annual net sales targets, (iii) sales-based royalties at specified percentages of net sales ranging from the high single digits to 15%, and (iv) manufacture and supply of clinical and commercial Products. The Company has fully constrained the development milestone consideration using the most likely amount method and will recognize that revenue when it is probable that recognition of revenue related to the milestone will not result in a significant reversal in amounts recognized in future periods, and as such have been excluded from the transaction price. In September 2020, the Company received a non-refundable $1.0 million development milestone payment upon acceptance by Chinese regulatory authorities of a Phase 3 bridging study design to support registration in China. The Company recognized this $1.0 million payment as revenue in the third quarter of the year ended December 31, 2020. The Company will recognize revenue related to the sales-based commercial and royalty milestones and royalties at the later of (i) when the related sales occur or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied), as they were determined to relate predominantly to the licenses granted to Apollomics and, therefore, have been excluded from the transaction price. Lastly, the Company has determined that the consideration for the manufacturing and supply is all variable and is fully constrained. Variable consideration allocated to manufacturing and supply will be recognized at a point in time when the Product is delivered and when the title to the Product is transferred to the customer pursuant to the agreement. The Company reassesses the transaction price in each reporting period and upon the occurrence of a change in circumstances or final resolution of any particular event.

In June 2020, the Company and Apollomics entered into a clinical supply agreement pursuant to which the Company will manufacture and supply the Products at agreed upon prices. Apollomics has the option to begin manufacture of the Products after appropriate material transfer requirements are met. During the six months ended June 30, 2021, the Company recognized $1.1 million as revenue from the sale of clinical supplies to Apollomics.

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10. Risks and Uncertainties

COVID-19

In March 2020, the World Health Organization declared the novel coronavirus disease 2019, or COVID-19, outbreak a pandemic. In order to mitigate the spread of COVID-19, governments have imposed unprecedented restrictions on business operations, travel and gatherings, resulting in a global economic downturn and other adverse economic and societal impacts. The COVID-19 pandemic has also overwhelmed or otherwise led to changes in the operations of many healthcare facilities.

The impact of the COVID-19 pandemic on the Company’s business and financial performance is uncertain and depends on various factors, including the duration of the pandemic, government restrictions and other actions, including relief measures and mass vaccination efforts, implemented to address the impact of the pandemic, and resulting impacts on the financial markets and overall economy. The imposition of “lockdown,” “social distancing” and “shelter in place” directives by state and federal governments in the United States as well as governments in other regions of the world in response to the COVID-19 pandemic, including in locations in which its Phase 3 clinical trial of uproleselan is being conducted, resulted in slowed clinical site initiation, patient recruitment and enrollment rates early in the pandemic. Enrollment rates have returned to forecasted levels since the lockdowns. However, the COVID-19 infection rates continue to fluctuate which could negatively affect enrollment going forward. The Company is unable to determine the extent of the impact of the pandemic on its operations and financial condition going forward. These developments are highly uncertain and unpredictable, and may materially adversely affect the Company’s financial position and results of operations. The Company continues to closely monitor the COVID-19 situation and any potential impact to its planned activities.

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ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Certain statements contained in this Quarterly Report on Form 10-Q may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The words or phrases “would be,” “will allow,” “intends to,” “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimate,” “project,” or similar expressions, or the negative of such words or phrases, are intended to identify “forward-looking statements.” We have based these forward-looking statements on our current expectations and projections about future events. Because such statements include risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause or contribute to these differences include those below and elsewhere in this Quarterly Report on Form 10-Q, our Annual Report on Form 10-K, particularly in Part I – Item 1A, “Risk Factors,” and our other filings with the Securities and Exchange Commission. Statements made herein are as of the date of the filing of this Form 10-Q with the Securities and Exchange Commission and should not be relied upon as of any subsequent date. Unless otherwise required by applicable law, we do not undertake, and we specifically disclaim, any obligation to update any forward-looking statements to reflect occurrences, developments, unanticipated events or circumstances after the date of such statement.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited financial statements and related notes that appear in Item 1 of this Quarterly Report on Form 10-Q and with our audited financial statements and related notes for the year ended December 31, 2020, which are included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 2, 2021.

Overview

We are a clinical-stage biotechnology company focused on the discovery and development of novel glycomimetic drugs to address unmet medical needs resulting from diseases in which carbohydrate biology plays a key role. We are developing a pipeline of proprietary glycomimetics, which are small molecules that mimic the structure of carbohydrates involved in important biological processes, to inhibit disease-related functions of carbohydrates such as the roles they play in inflammation, cancer and infection. We believe this represents an innovative approach to drug discovery to treat a wide range of diseases. We are focusing our efforts on drug candidates for diseases that we believe will qualify for orphan drug designation.

Our proprietary glycomimetics platform is based on our expertise in carbohydrate chemistry and our understanding of the role carbohydrates play in key biological processes. Most human proteins are modified by the addition of complex carbohydrate structures to the surface of such proteins, which affects the functions of the proteins and their interactions with other molecules. Our initial research and development efforts have focused on drug candidates targeting selectins, which are proteins that serve as adhesion molecules and bind to carbohydrates that are involved in the inflammatory component and progression of a wide range of diseases, including hematologic disorders, cancer and cardiovascular disease. For example, we believe that members of the selectin family play a key role in tumor metastasis and resistance to chemotherapy. Inhibiting specific carbohydrates from binding to selectins has long been viewed as a potentially attractive approach for therapeutic intervention. The ability to successfully develop drug-like carbohydrate compounds that inhibit binding with selectins, known as selectin antagonists, has historically been limited by their potency and the complexities of carbohydrate chemistry. We believe our expertise in the rational design of potent glycomimetic antagonists with drug-like properties and in carbohydrate chemistry enable us to design highly effective selectin antagonists and other glycomimetics that may inhibit the disease-related functions of certain carbohydrates in order to develop novel drug candidates to address orphan diseases with high unmet medical need.

Our lead glycomimetic drug candidate, uproleselan, is a specific E-selectin inhibitor that we are developing to be used in combination with chemotherapy to treat patients with acute myeloid leukemia, or AML, a life-threatening hematologic cancer, and potentially other hematologic cancers. In 2018, we commenced a randomized, double-blind, placebo-controlled Phase 3 pivotal clinical trial to evaluate uproleselan in individuals with relapsed/refractory AML, the design of which was based on guidance received from the U.S. Food and Drug Administration, or FDA. We intend to enroll approximately 380 adult patients with relapsed or refractory AML at centers in the United States, Canada, Europe and Australia. We expect to complete enrollment of the trial by year-end 2021.

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In 2018, we also signed a Cooperative Research and Development Agreement, or CRADA, with the National Cancer Institute, or NCI, part of the National Institutes of Health, to conduct a Phase 2/3 randomized, controlled clinical trial testing the addition of uproleselan to a standard chemotherapy regimen. The trial opened for enrollment in early 2019 and enrolled the first patient in April 2019.

Uproleselan is also being studied in multiple investigator-sponsored trials (ISTs). In May 2021, clinicians at the Washington University School of Medicine in St. Louis dosed the first patient in an IST evaluating uproleselan as a prophylactic agent to reduce gastrointestinal (GI) toxicities and improve clinical outcomes in patients receiving high-dose melphalan in autologous hematopoietic cell transplantation (auto-HCT) for multiple myeloma. We anticipate a data readout from the trial in 2022.

In July 2021, clinicians at the University of California (UC) Davis Comprehensive Cancer Center initiated dosing of the first patient in a clinical study of uproleselan combined with venetoclax and azacitidine for the treatment of older or unfit patients with treatment-naïve AML. The goal of the two-part IST is first to determine a recommended Phase 2 dose, and then to explore efficacy in a dose expansion cohort. We are providing uproleselan for the IST. Up to 31 patients will be enrolled, and a preliminary/interim readout is expected in 2022.

In July 2021, clinicians at the University of Texas MD Anderson Cancer Center treated the first patient in a Phase 1b/2 study evaluating uproleselan, added to cladribine plus low dose cytarabine in patients with treated secondary AML (ts-AML). We are providing uproleselan for the IST. The Phase 1b/2 single-arm trial is enrolling patients 18 years or older, with a diagnosis of ts-AML who have not received therapy for their AML. Considered a distinct high-risk subset of AML with an adverse prognosis, ts-AML is defined as AML arising from a previously treated antecedent myeloid neoplasm (myelodysplastic syndrome or myeloproliferative neoplasm). Clinicians plan to enroll approximately 25 patients in the trial and a preliminary/interim readout is expected in 2022.

We have rationally designed an innovative antagonist of E-selectin, GMI-1687, that could be a subcutaneously administered treatment. Initially developed as a potential life-cycle extension to uproleselan, we believe that GMI-1687 could be developed to broaden the clinical usefulness of an E-selectin antagonist to conditions where outpatient treatment is preferred or required. We are currently conducting preclinical activities and studies with GMI-1687 to support our planned submission of an investigational new drug application, or IND, to the FDA.

We are also developing a drug candidate, GMI-1359, that simultaneously targets both E-selectin and a chemokine receptor known as CXCR4. In the fourth quarter of 2019, we initiated a Phase 1b trial of GMI-1359 in hormone receptor positive breast cancer patients whose tumors have spread to bone, and the first patient was dosed in January 2020. We are also advancing other preclinical-stage programs, including small-molecule glycomimetic compounds that inhibit the protein galectin-3, which we believe may have potential to be used for the treatment of fibrosis, cancer and cardiovascular disease.

We have financed our operations primarily through private placements of our securities, up-front and milestone payments under our license and collaboration agreements and the net proceeds from public offerings of common stock, including sales of common stock under at-the-market sales facilities with Cowen and Company LLC, or Cowen. We have no approved drugs currently available for sale, and substantially all of our revenue to date has been revenue from up-front and milestone payments under license and collaboration agreements.

Since inception, we have incurred significant operating losses. We had an accumulated deficit of $338.1 million as of June 30, 2021 and we expect to continue to incur significant expenses and operating losses over at least the next several years. Our net losses may fluctuate significantly from quarter to quarter and year to year, depending on the timing of our clinical trials and our expenditures on other research and development activities. We anticipate that our expenses will increase substantially as we:

initiate and conduct our planned clinical trials of uproleselan, GMI-1359 and GMI-1687, including fulfilling our funding and supply commitments related to the clinical trial of uproleselan being conducted in collaboration with NCI;
conduct NDA-enabling activities related to manufacture, toxicology and clinical pharmacology for our product candidates;
manufacture additional uproleselan drug supplies for validation and prepare for commercialization;

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seek to discover and develop additional drug candidates;
seek regulatory approvals for any drug candidates that successfully complete clinical trials;
ultimately establish a sales, marketing and distribution infrastructure and scale up external manufacturing capabilities to commercialize any drug candidates for which we may obtain regulatory approval;
maintain, expand and protect our intellectual property portfolio;
hire additional clinical, quality control, regulatory and scientific personnel;
maintain sufficient level of insurance including product liability and directors, officers and corporate liability insurance policies; and
add operational, financial and management information systems and personnel, including personnel to support our drug development and potential future commercialization efforts.

To fund further operations, we will need to raise capital. We may obtain additional financing in the future through the issuance of our common stock, through other equity or debt financings, potentially including the use of our at-the-market sales facility with Cowen, or through collaborations or partnerships with other companies. We may not be able to raise additional capital on terms acceptable to us, or at all, and any failure to raise capital as and when needed could compromise our ability to execute on our business plan. For example, the current global COVID-19 pandemic presents material uncertainty and its disruption of the capital markets may have a material adverse impact on our ability to raise additional capital if we decide to do so. Although it is difficult to predict future liquidity requirements, we believe that our existing cash and cash equivalents will be sufficient to fund our operations into the fourth quarter of 2022. However, our ability to successfully transition to profitability will be dependent upon achieving a level of revenues adequate to support our cost structure. We cannot assure you that we will ever be profitable or generate positive cash flow from operating activities.

Impact of COVID-19 on Our Business

The imposition of “lockdown,” “social distancing” and “shelter in place” directives by state and federal governments in the United States as well as governments in other regions of the world in response to the COVID-19 pandemic, including in locations in which our Phase 3 clinical trial of uproleselan is being conducted, resulted in slowed clinical site initiation, patient recruitment and enrollment rates early in the pandemic. Enrollment rates have returned to forecasted rates since the beginning of the lockdowns. However, COVID-19 infection rates continue to fluctuate, which could negatively affect enrollment going forward. We cannot at this time fully assess the effect of the COVID-19 pandemic on our continued enrollment and whether the pandemic would potentially materially adversely impact the timing of completion of enrollment of our Phase 3 clinical trial. We continue to closely monitor the COVID-19 situation and any potential impact to our planned activities.

We have also implemented business continuity plans designed to address and mitigate the impact of the COVID-19 pandemic on our employees and our business. While to date we have experienced limited impacts beyond the earlier delays in recruitment in our ongoing uproleselan Phase 3 clinical trial, given the global economic slowdown, the overall disruption of global healthcare systems and the other risks and uncertainties associated with the pandemic, our business, financial condition, results of operations and growth prospects could be materially adversely affected. We continue to closely monitor the COVID-19 situation as we evolve our business continuity plans and response strategy. In March 2020, our workforce transitioned to working remotely in accordance with federal and state declarations. We have partially reopened to allow certain employees to return to the office based on a phased approach that is consistent with federal and state guidelines, with a focus on employee safety and optimal work environment.

Our Collaboration and License Agreements

Apollomics

In January 2020, we entered into an exclusive collaboration and license agreement with Apollomics (Hong Kong) Limited, or Apollomics, for the development and commercialization of uproleselan and GMI-1687 in Mainland China, Hong Kong, Macau and Taiwan, also known as Greater China. Under the terms of the agreement, Apollomics will be responsible for clinical development and commercialization in Greater China. We will also collaborate with Apollomics

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to advance the preclinical and clinical development of GMI-1687. We received an upfront cash payment of $9.0 million and in September 2020 received a $1.0 million development milestone payment. Subject to the terms of the agreement, we will be eligible to receive potential further milestone payments totaling approximately $179.0 million, as well as tiered royalties ranging from the high single digits to 15%, as a percentage of net sales. Apollomics will be responsible for all costs related to development, regulatory approvals, and commercialization activities for uproleselan and GMI-1687 in Greater China, and we and Apollomics expect to enter into clinical and commercial supply agreements with respect to our provision of uproleselan and GMI-1687 to Apollomics. We retain all rights for both compounds in the rest of the world.

In September 2020, the China National Medical Products Administration (NMPA) Center for Drug Evaluation (CDE) granted IND approval for uproleselan (APL-106) enabling the initiation of a Phase 1 pharmacokinetics and tolerability study and includes acceptance of a Phase 3 bridging study of APL-106 in combination with chemotherapy in relapsed/refractory AML. In January 2021, APL-106 was granted Breakthrough Therapy Designation from the China NMPA CDE for the treatment of relapsed/refractory AML.

In June 2020, we entered into a clinical supply agreement with Apollomics under which we will manufacture and supply uproleselan product to Apollomics at agreed upon prices. Apollomics has the option to begin manufacture after appropriate material transfer requirements are met. During the six months ended June 30, 2021, we recognized $1.1 million in revenue from the sale of clinical supplies to Apollomics under the clinical supply agreement.

Critical Accounting Policies and Significant Judgments and Estimates

Our management’s discussion and analysis of our financial condition and results of operations are based on our financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses in our financial statements. On an ongoing basis, we evaluate our estimates and judgments, including those related to our revenue recognition, accrued research and development expenses, stock-based compensation expense and income taxes. We base our estimates on historical experience, known trends and events and various other factors that we believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other resources. Actual results may differ from these estimates and judgments under different assumptions or conditions. We periodically review our estimates in light of changes in circumstances, facts and experience. The effects of material revisions in estimates are reflected in our financial statements prospectively from the date of the change in estimate.

We define our critical accounting policies as those accounting principles generally accepted in the United States that require us to make subjective estimates and judgments about matters that are uncertain and are likely to have a material impact on our financial condition and results of operations, as well as the specific manner in which we apply those principles. For a description of our critical accounting policies, please see the disclosures in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2020. There have not been any material changes to our critical accounting policies since December 31, 2020.

Components of Operating Results

Revenue

To date, we have not generated any revenue from the sale of our drug candidates and do not expect to generate any revenue from the sale of drugs in the near future. Substantially all of our historical revenue consisted of upfront and milestone payments under license and collaboration agreements.

Research and Development

Research and development expenses consist of expenses incurred in performing research and development activities, including compensation and benefits for full-time research and development employees, facilities expenses, overhead expenses, cost of laboratory supplies, clinical trial and related clinical manufacturing expenses, fees paid to CROs and other consultants and other outside expenses. Other preclinical research and platform programs include activities related to exploratory efforts, target validation, lead optimization for our earlier programs and our proprietary

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glycomimetics platform. Our research and development expenses have related primarily to the development of rivipansel, uproleselan and our other drug candidates.

We do not currently utilize a formal time allocation system to capture expenses on a project-by-project basis because we are organized and record expense by functional department and our employees may allocate time to more than one development project. Accordingly, we only allocate a portion of our research and development expenses by functional area and by drug candidate.

Research and development costs are expensed as incurred. Non-refundable advance payments for goods or services to be received in the future for use in research and development activities are deferred and capitalized. The capitalized amounts are expensed as the related goods are delivered or the services are performed.

Research and development activities are central to our business model. Drug candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later stage clinical trials. We expect our research and development expenses to increase over the next several years as we seek to progress uproleselan, GMI-1359 and our other drug candidates into and through clinical development. However, it is difficult to determine with certainty the duration and completion costs of our current or future preclinical studies and clinical trials of our drug candidates, or if, when or to what extent we will generate revenues from the commercialization and sale of any of our drug candidates that obtain regulatory approval. We may never succeed in achieving regulatory approval for any of our drug candidates.

The duration, costs and timing of clinical trials and development of our drug candidates will depend on a variety of factors that include:

per patient trial costs;
the number of patients that participate in the trials;
the number of sites included in the trials;
the countries in which the trial is conducted;
the length of time required to enroll eligible patients, which could be lengthened as a result of the ongoing COVID-19 pandemic;
the number of doses that patients receive;
the drop-out or discontinuation rates of patients;
potential additional safety monitoring or other studies requested by regulatory agencies;
the duration of patient follow-up; and
the safety and efficacy profile of the drug candidate.

In addition, the probability of success for each drug candidate will depend on numerous factors, including competition, manufacturing capability and commercial viability. We will determine which programs to pursue and how much to fund each program in response to the scientific and clinical success of each drug candidate, as well as an assessment of each drug candidate’s commercial potential.

General and Administrative

General and administrative expenses consist primarily of salaries and other related costs, including stock-based compensation, for personnel in executive, finance, accounting, business development and human resources functions. Other significant costs include facility costs not otherwise included in research and development expenses, legal fees relating to patent and corporate matters, fees for accounting and consulting services and corporate insurance premiums. We anticipate that our general and administrative expenses will increase in the future to support our continued research and development activities.

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Interest Income

Interest income consists of interest income earned on our cash and cash equivalents.

Results of Operations for the Three and Six Months Ended June 30, 2021 and 2020

The following tables set forth our results of operations for the three and six months ended June 30, 2021 and 2020:

Three Months Ended June 30, 

Increase/Decrease

(in thousands)

    

2021

    

2020

    

    

Revenue

$

$

$

NA

Costs and expenses:

                        

Research and development expense

 

10,167

 

9,871

 

296

3

%

General and administrative expense

 

4,237

 

4,235

 

2

0

%

Total costs and expenses

 

14,404

 

14,106

 

298

2

%

Loss from operations

 

(14,404)

 

(14,106)

 

(298)

2

%

Interest income

 

5

 

27

 

(22)

(81)

%

Net loss and comprehensive loss

$

(14,399)

$

(14,079)

$

(320)

2

%

Six Months Ended June 30, 

Increase/Decrease

(in thousands)

    

2021

    

2020

    

    

Revenue

$

1,056

$

9,000

$

(7,944)

(88)

%

Costs and expenses:

                        

Research and development expense

 

21,315

 

22,539

 

(1,224)

(5)

%

General and administrative expense

 

8,425

 

8,675

 

(250)

(3)

%

Total costs and expenses

 

29,740

 

31,214

 

(1,474)

(5)

%

Loss from operations

 

(28,684)

 

(22,214)

 

(6,470)

29

%

Interest income

 

11

 

472

 

(461)

(98)

%

Net loss and comprehensive loss

$

(28,673)

$

(21,742)

$

(6,931)

32

%

Revenue

During the six months ended June 30, 2021 and 2020, revenue was $1.1 million and $9.0 million, respectively, all of which was the result of payments received under the Apollomics Agreement for the development and commercialization of uproleselan and GMI-1687 in Greater China. During the six months ended June 30, 2021, we recognized $1.1 million in revenue from the sale of clinical supplies to Apollomics under the clinical supply agreement. In January 2020, we recognized $9.0 million in revenue from an upfront milestone payment.

Research and Development Expense

The following tables summarize our research and development expense by functional area for the three and six months ended June 30, 2021 and 2020:

Three Months Ended June 30, 

Increase/Decrease

(in thousands)

    

2021

    

2020

    

Clinical development

$

4,469

$

3,578

$

891

25

%

Manufacturing and formulation

 

1,584

 

2,089

 

(505)

(24)

%

Contract research services, consulting and other costs

 

696

 

440

 

256

58

%

Laboratory costs

 

492

 

436

 

56

13

%

Personnel-related

 

2,317

 

2,581

 

(264)

(10)

%

Stock-based compensation

609

747

(138)

(18)

%

Research and development expense

$

10,167

$

9,871

$

296

3

%

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Six Months Ended June 30, 

Increase/Decrease

(in thousands)

    

2021

    

2020

    

Clinical development

$

9,122

$

8,601

$

521

6

%

Manufacturing and formulation

 

3,875

 

5,226

 

(1,351)

(26)

%

Contract research services, consulting and other costs

 

1,239

 

1,007

 

232

23

%

Laboratory costs

 

1,005

 

1,010

 

(5)

(0)

%

Personnel-related

 

4,776

 

5,212

 

(436)

(8)

%

Stock-based compensation

1,298

1,483

(185)

(12)

%